OKCoin Bitcoin Exchange LogoChangpeng Zhao left OKCoin earlier this year, with the company owing him $10,000 and apparently feeling no obligation to pay him.

A company that doesn’t treat its employees well will inevitably have other problems, and so Zhao’s exit could have served as a warning for the rest of the community, including Roger Ver, who says they owe him tens of thousands of dollars now.

Zhao took the time to make a lengthy statement to the Bitcoin community via Reddit recently. As a former high-ranking company official, his view of how things work at OKCoin is valuable insight.

I tried hard to stay out of the public dispute between OKCoin and Roger Ver, hoping they would resolve themselves, over a contract relatively small in size. […] I have also always refrained from saying anything bad about my previous employer. But the situation has left me no choice but to make a public statement.

One of the more important things he said in his lengthy statement was that, initially, he tried to take the deal between OKCoin and Roger Ver off OK Coin’s hands. He says that Roger Ver is a friend of his, and that the gentleman’s agreement made with Ver was made between friends and businessmen. This is an historically bad way to do business.

Also read: Roger Ver & OKCoin In Dramatic & Public Contract Dispute

A written contract can serve both parties equally. The more money you’re talking about, the worse an idea it is to do something without legal documents to bind you and the other party. But, this wasn’t the overwhelming point that Zhao was attempting to make. The overwhelming point he was trying to make was that he expected more of OKCoin regarding their commitment to Roger Ver:

Roger and I are friends. We have enough respect and trust for each other that we both thought a simple gentleman’s agreement would suffice. I did not expect OKCoin would delay or default on payments of $10k in size. For this I apologize. I also did not expect OKCoin would not pay my salary for the time I spent there.

“Still a Good Deal”

Zhao believes the contract works for both parties equally, and that OKCoin should have no problem making the money it agreed to make from Bitcoin.com. He talks about how the company had planned to make around (at least) $76,000 from 2,500 unique daily visitors, saying the breakdown of advertisements was provided to him by OKCoin CEO Star Xu.

OKCoin internally planned to charge $12,000/month for two top ad spots, $8000/month for 6 middle position spots, and a number of $4000/month ad spots below the first scroll. […] A few ex-employees can confirm this.

In a move that Zhao considers a blunder, the company turned away advertisers who preferred to pay based on the pay-per-click model, rather than the monthly flat-fee model. For smaller firms, monthly advertising rates don’t work because, as with any advertising, there is no guarantee of return on investment. With pay-per-click, they can be sure that they’re getting something for their money, and often enough it can cost the advertiser more than the flat-rate model.

OKCoin “Violating its Obligations”

Zhao says that he remembers version seven of the contract, though he does not recall a later version, which is the crux of the dispute between Roger Ver and the exchange. Ver says that his signature was forged onto the supposed version eight of the contract, and OKCoin says he is just mad because things didn’t work his way. OKCoin also now says that they can prove Ver signed the eighth version. Zhao says it doesn’t matter, either way you look at it, OKCoin is out of line in this situation.

I signed version 7 of the contract with Roger. […] I do not recall a version 8. […] With either version of the contract, OKCoin is seriously violating its obligations.

Other Problems with OKCoin

Zhao’s post overall serves as a word of caution against using the OKCoin Bitcoin exchange at all. He alleges that they are using bots on their exchanges, similar to the ones who ran up the price of Bitcoin to unsustainable levels on Mt. Gox.

He says that they are not transparent, and at this point in the short history of Bitcoin, we have learned that a lack of transparency can quite easily translate into a lack of authenticity or even to nefarious activities. Zhao joins Roger Ver in calling for a full proof of reserve by OKCoin but says that they will gladly fake such proof.

I can confirm OKCoin removed a number of accounts (used by OKCoin bots) to pass the Proof-of-Reserve audit in Aug 2014. In essence, these bots trade on fractional (or fictional) reserves. Stephan Thomas was lied to during the audit. This is an unfortunate limitation of the proof-of-reserves method. […] As a side note, Stephan Thomas specifically did not want any compensation for his audit efforts. Before the audit, OKCoin offered to make a donation in his name to a charity of his choice. He named a charity. After the audit was carried out, OKCoin never made that donation.

The matter between Roger Ver and OKCoin will resolve itself eventually, but yet another black mark will be left on the history of Bitcoin. Perhaps it’s time for truly decentralized exchanges, for cutting out these middle men who are profiting while not necessarily offering anything concrete to the confusing world of Bitcoin.

What do you think? Should OKCoin call it quits if they are unable to meet their obligations, or should people like Roger Ver and Changpeng Zhao just cut their losses and carry on? Like and share above and comment below!